An expert panel has recommended that India develops its own insurance-linked securities (ILS) regulatory regime through its International Financial Services Centres Authority (IFSCA), which would include exploring the issuance of instruments such as catastrophe bonds.
The panel, the Working Group (WG), which consists of industry experts, particularly within Alternative Risk Transfer (ART) arrangements, has published a report that explains how the IFSCA can play a crucial role towards making India a hub for catastrophe bonds, particularly as climate risk continues to intensify and the global ILS market seeks geographic diversification.
However, as the panel notes, this will require strategic regulatory reforms, investments being made within risk modeling, and strong collaborations between the government, private sector, and international partners.
Researchers from the Working Group have spotted the success countries including Singapore and Hong Kong have had, in establishing an ILS regulatory regime, and how developing financial instruments such as catastrophe bonds have helped those countries combat climate risk.
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